The Federal Government has incurred a deficit spending of N36.8 trillion in eight years under the administration of President Mohammadu Buhari from 2015 to 2022.
Analysis of data from the Central Bank of Nigeria, CBN, on Federal Government finances from 2015 to 2022 revealed that 77 per cent of the deficit spending occurred in the last four years, from 2019 to 2022.
The data revealed that total revenue for the eight years stood at N32.05 trillion, while total expenditure during the period stood at N68.8 trillion, indicating deficit spending of N36.8 trillion.
In the first four years, 2015 to 2018, the government recorded N13.9 trillion as revenue but spent N24.3 trillion, resulting in deficit spending of N10.4 trillion.
However, the deficit spending jumped by 60 per cent in the last four years, 2019 to 2022.
Compared to the previous four years, revenue rose by 31 percent to N18.2 trillion, while expenditure rose by 83 percent to N44.5trillion. Consequently, deficit spending rose to N26.4 trillion, translating to 60 percent increase when compared with the previous four years.
Further analysis showed that over 22 per cent of the eight year deficit spending was incurred in 2022 alone.
During the year, the Federal Government’s revenue grew by 14.7 per cent to N5.05 trillion from N4.4 trillion in 2021, while expenditure stood at N13.4 trillion in 2022, up by 14.5 percent from N11.7 trillion in 2021.
As a result, the government incurred N8.3 trillion as deficit spending, representing a 13.6 per cent increase from N7.3 trillion in 2021.
A major factor behind the spike in deficit spending is the steady and sharp increase in fuel subsidy spending which stood at N9.34 trillion in the eight years from 2015 to 2022.
Further analysis revealed that annual fuel subsidy spending shot up by 571 per cent to N4.39 trillion in 2022 from N654 billion in 2015.
Given that the N36.8 trillion deficit incurred in the eight year period was financed by borrowing, total debt stock, according to data from the Debt Management Office, DMO, rose sharply by 267 per cent or N33.65 trillion to N46.25 trillion in 2022 from N12.6 trillion in 2015. This excludes the N23 trillion borrowed from CBN as Ways and Means.
According to the World Bank, the rise in deficit spending as well as the huge debt stock will worsen except the government goes ahead with the proposed removal of fuel subsidy, even as it recommended other measures to strengthen the economy.
The World Bank stated in the Macro Poverty Outlook for Nigeria: April 2023 brief released last month: “The fiscal position deteriorated. In 2022, the cost of petrol subsidy increased from 0.7 per cent to 2.3 per cent of GDP. Low non-oil revenues and high-interest payments compounded fiscal pressures.
“The fiscal deficit was estimated at 5.0 per cent of GDP in 2022, breaching the stipulated limit for a federal fiscal deficit of 3 per cent.
“This has kept the public debt stock at over 38 per cent of GDP and pushed the debt service to revenue ratio from 83.2 per cent in 2021 to 96.3 per cent in 2022.
“Fiscal and debt pressures will increase if the petrol subsidy is not phased out in June 2023, as envisaged in the 2023 Budget.”
Similarly, the International Monetary Fund, IMF, in its Nigeria: 2022 Article IV Consultation, stated: “Directors highlighted the need for bold fiscal reforms to create needed policy space, put public debt on sound footing, and reduce vulnerabilities.
“They urged the authorities to deliver on their commitment to remove fuel subsidies by mid-2023, and to increase well-targeted social spending.
“Strengthening revenue mobilization, including through tax administration reforms, expanding the tax automation system and strengthening taxpayer segmentation, and improving tax compliance is also a priority.”